Caledonia Posts Highest-Ever Profit but Reveals Ac...

Caledonia Posts Highest-Ever Profit but Reveals Accounting Blunder

Nyashadzashe Ndoro- Chief Reporter

Victoria Falls Stock Exchange-listed gold mining giant Caledonia Mining Corporation Plc has reported a record gross profit of US$77.0 million, an impressive 86% surge from the previous year, fueled by higher gold prices that pushed gross revenue to US$183.0 million.

This financial triumph, however, is tempered by the company's admission of a significant accounting error, necessitating a restatement of financial statements dating back to 2019 and a declaration that past filings should no longer be relied upon due to a miscalculation of deferred tax liabilities at its flagship Blanket Mine.

Net attributable profit reached US$17.9 million, a stark contrast to the US$7.9 million net loss in 2023. Operating cash flow also saw a substantial improvement, rising to US$42.0 million compared to US$14.8 million in 2023. Basic IFRS earnings per share stood at 91.2 cents, a considerable turnaround from the loss per share of 43.6 cents in 2023.

Operationally, Blanket Mine performed steadily, achieving gold production of 76,656 ounces, within the company’s guidance. This offset lower production at the Bilboes oxide mine, which was placed on care and maintenance in September 2023. The consolidated average realized gold price per ounce rose to US$2,347, up from US$1,910 in 2023, while the on-mine cost per ounce remained relatively stable at US$1,073.

Despite its strong financial performance, Caledonia disclosed a significant accounting error related to the calculation of deferred tax liabilities at Blanket Mine.

The error, stemming from the introduction of the RTGS currency in Zimbabwe in 2018 and subsequent accounting interpretations, resulted in deferred tax liabilities being incorrectly calculated in RTGS$ and translated into USD. The company stated that the carrying value of these liabilities should have been denominated in USD from the outset.

As a result of this error, Caledonia is restating its annual and interim financial statements for the period between January 1, 2019, and December 31, 2024. The company has also declared that these previously filed financial statements should no longer be relied upon concerning the affected items. Caledonia stated that the restatement has no impact on historically reported cash or cash flow statements, nor on historic income tax calculations or submissions to tax authorities.

Caledonia has initiated remediation efforts, including engaging external accounting advisors and conducting a detailed analysis of deferred tax accounting rules.

Management has also reaffirmed the importance of internal controls and a strong control environment. The company anticipates completing these remediation efforts in the second quarter of 2025.

Looking ahead, Caledonia remains focused on its strategic objectives, including maintaining stable production at Blanket, optimizing the Bilboes project, and continuing exploration activities at Blanket and its Motapa property.

The feasibility study for the Bilboes project is being extended to explore potential optimizations, including the sale of concentrate, relocation of the tailings storage facility, and incorporating near-term opportunities at Motapa. Capital investment for 2025 is budgeted at US$41.0 million, with the majority allocated to Blanket.

The board also announced several changes, including the appointment of two new independent non-executive directors in February 2025 and the succession of the Chief Financial Officer, with Mr. Ross Jerrard taking over from Mr. Chester Goodburn today.